Portugal:
Government heads for end of the line

10 January 2013

Cartoon of Portuguese President Aníbal Cavaco Silva. His hands are replaced by the arrow logo of his Social Democratic Party

Cristina Sampaio

In requesting that the constitutional court re-examine the state budget for 2013, president Cavaco Silva runs the risk of plunging his country into a political crisis, warns a researcher and political analyst. As a result, the Portuguese people may be called on to take responsibility for the remedy chosen to cure the country’s economic ills.

In accordance with the law, President Aníbal Cavaco Silva had three options, each of which had different implications, when responding to the state budget presented to him by the government.

In choosing a median solution, which consisted of approving the budget, while, at the same time, requesting that it be retrospectively examined by the constitutional court, the president was probably unaware that his decision, which he considered to be a judgement worthy of Solomon, effectively amounted to announcing “Terminus, everybody off” for Pedro Passos Coelho’s government, even if it did not derail it immediately.

If the constitutional court invalidates the three articles singled out by the president, the executive will have to find another means to collect the sum of $1.7bn (€1.3bn) which these measures were supposed to generate. Without this revenue, the government runs the risk of being unable to complete its programme, which is also an indispensable condition for the financing of the country stipulated in the memorandum signed with the troika FMI-BCE-UE.

If the programme is not completed, there will be no release of the tranches of cash that Portugal so desperately craves – for proof, look no further than the dark circles under the finance minister’s eyes.

Where to find the money?

And this is the crux of the problem! When you consider the unbearable weight of the tax burden already weighing on the population, and when you take into account that the measures adopted to combat the black economy (which are wholly justified in my opinion) will not yield immediate results, or, what would have been better still, retroactive results, you have to ask: where can the government hope to find such a sum?

Sadly, the answer to this question will likely be one that Passos Coelho, who fought so hard to gain power, will have no desire to hear: the train will grind to halt, and the government will find no other means to bring in revenue.

In this situation, Pedro will have virtually no option but to retun home to [his wife] Laura – the price that has to be paid for the familiarity of his Christmas message on Facebook – once he has presented his resignation to Cavaco Silva, leaving him to sort out the problem.

Drastic action

The solution could be for the president to demonstrate a greater commitment (for example by nominating a government, as [Portugal’s first post-dictatorship] president Ramalho Eanes did in his time), or by calling for early general elections, which would force the people, regardless of whether they like it or not, to take responsibility for the austerity cure.

Having said that, there is no guarantee that the electorate, if called on prematurely to vote, will grant a majority to a single party, and given that governmental instability is not necessarily compatible with the handover of the tranches that the state needs to fulfill its obligations, Pedro Passos Coelho will certainly not be the only victim of this crisis. Late in the day and in the wake of harsh criticism of his silence, Cavaco Silva, has finally decided to speak his mind in a speech that was rich in ambiguity. As for the opposition, already beguiled by the vision of a path to power, it has put its own interest ahead of the interests of the nation.

End of Portuguese political model?

With all eyes fixed on this Greek tragedy, the country understands that there is more at stake than the political condemnation of the current government, what we are seeing is the end of the Portuguese political model, or the end of our way of doing politics in Portugal.

The persistent presence in the corridors of power of a restricted political class that has no vision of the national interest – and the penury of voices that are gifted with incantatory force – has allowed the right to take control of politics.

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On the web

IMF proposals could be against the constitution

"IMF pour more fuel on to the constitutional fire," writes Público a day after Jornal de Negócios reported details of an 80 page document sent to the Portuguese government by the IMF, in which the Fund suggests a list of permanent cuts in wages, pensions and redundancies in the public sector.

These recommended measures have the potential to spark even more constitutional debate in the country, notes the newspaper, which spoke to two constitutional experts. Both considered the following reforms “likely to be unconstitutional”: The permanent cut of 15 per cent of all pensions, the payment of the 13th and 14th month salaries being linked to GDP growth, the increase of the retirement age from 65 to 66, the new calculation formula for future and current pensioners and permanent salary cuts to civil servants.

In its editorial Público writes that –

The IMF document takes two contradictory approaches. On one hand, it suggests that interest groups are responsible for the fact that state spending has created inequality and also shows how state inefficiency punishes the citizen. But, on the other hand, the bulk of the IMF proposals are redundancies and wage cuts in the public sector or cuts in pensions. And then, the debate goes back to a point where we have been before: What are we really talking about when we speak of state "excess"? The conversation is serious and unavoidable.